Author: bpwebbrian

Early Valentines

~ bpwebbrian

One of the things I like about barter is that it’s relationship based.  In the cash world, especially in the current economy it’s very easy for a transaction to be adversarial.  You want the best possible product/service for the lowest possible price.  Additionally if something doesn’t work out exactly as planned you somehow feel like you’ve been ripped off.  The relative ease of a cash transaction takes the humanity out of the deal.  I would like to encourage you to have a relationship with your trade partners.  Even more than that, I would encourage you to look for the win-win deal instead of only looking for the best possible deal for you.  Now I’m not saying you should be a chump:  I’m just saying to look at both sides of the deal.  Here are a couple examples that I ran into in the last couple weeks.

I called up a local florist in my trade exchange last week to arrange for flowers to be delivered to my wife and daughter for Valentines day.  I can say that here because my wife doesn’t read my blog! <grin>  I opened the conversation saying that I knew that she was probably already slammed with cash orders on Valentine’s day, but would she be able to conduct a barter deal with me for delivery on the day before Valentines day?  She said she could but that she already had sold all the roses she had available.  I told her just to put together whatever she had that would be nice.  Everybody wins.

I had carpet installed in my home on barter last week.  The deal included the materials because my trade partner had an over-stocked warehouse and was looking to move the carpet.  As the installers were getting close to finishing they told me that it appeared they were short on materials.  They had misjudged and didn’t have enough carpet for a couple closets.  They said they could order another roll of the same carpet but it would be a week or so before they could install it.  I told them that the whole reason this deal was happening was because the owner was trying to clear out his warehouse and that I didn’t want him to have to order new carpet.  They said that they probably had some remnants from another job that were very similar to my new carpet and that if I was OK with that, they could install it in my closets the next day.  Again…everybody wins.

It’s my goal to be my barter partner’s favorite customer.  More on that in another article soon.

Low incremental cost = high barter profits

~ bpwebbrian

If you are one of those lucky businesses that have a low incremental costs for additional “units” sold then barter can be a gold mine for you!  There are some businesses where they have to outlay a certain amount of resources to keep their doors open and (for the most part) their expenses don’t vary greatly based on the volume of customers served.  Examples would include movie theaters, gyms, martial arts dojos, etc. etc.  For a yoga studio there is literally no additional cost to add a new barter customer to their class.  As such the barter earned is like free money!!!  To those people I say….BARTER MORE!  I’m am at a loss as to why I can’t barter to go to the movies right now.  Ug…but I digress…

Unfortunately many of the folks reading this right now are not in the lucky situation to be able to earn barter credits free.  That being said I would encourage you to take a look at what your real costs are to barter.  It’s probably lower than you think.  For example, I have a barter partner that operates a mini-golf/arcade/go-kart racing facility.  Other than a little gas for go-kart racing barter is pretty much pure profit for them.  They would still have to have the same number of employees, maintenance, electricity, etc. with or without their barter clients.  I ran into a frustrating negotiation with a laundromat a year or so back.  They already had a manned location where they would wash and fold your laundry for you if you want.  Their current staff had free time on their hands so they could have provided this service on barter and their only cost would have been soap and electricity.  And for all that they couldn’t see the value of barter.  PEOPLE… get a clue here.  Why would you not want to have a sale that’s 95% profit?

I would like to encourage you to look at your business and see how much of your expenses are “sunk” and can be allocated against your cash business.  I think you will find that if you do so your incremental costs will be low and your barter profit will be shockingly high.  Now go out there and make some trades!  Also remember…every barter client that you add will tell their friends about your service.  You WILL gain new cash clients because of your barter business.

book review: Profit from Trade

~ bpwebbrian

First off I’d like to thank Tom Hood for sending me a copy of this book.  It’s a good fast read.  The 23 page self-published e-book was provided to me as a PDF document.  Tom has 30 years of experience in the barter industry and wrote the book originally to help ramp up new barter exchange members.  I have to say that I applaud his efforts in writing this book because I think the single weakest point in the professional barter industry is training new members.  It wouldn’t surprise me if trade volume from existing members could be doubled over-night if they were only more thoroughly trained.

The book is a good basic resource and hit all the main areas of interest for new traders but also did have a few reminders the experienced barter fanatics will want to pay attention to:

  1. I like that he included a formal work-sheet to help people think both of what they have to trade and what they want to trade for.  This is usually done seat-of-the-pants and sitting down and doing the work of going through the form can help pry out some new ideas.
  2. He spends some time on trading Due Bills (gift certificates).  I think too often this kind of trading is only done by advanced traders.  There is really nothing complicated about it.  Beginning traders should remember that they can trade gift certificates.  For example, this winter I bought a Christmas Tree from someone on CraigsList in exchange for  a gift certificate to a local mini-golf center.
  3. I enjoyed his 10 rules for managing your barter balance.  In the same way that people fail to plan their cash flow, they also fail to plan their barter credit flow.
  4. I personally was reminded that I need to purchase some Ad Specialty items on barter.  It’s a great way to get your name out in public w/o spending any cash.

You can purchase the book on barter by emailing barter@optonline.net or you can buy it for cash at www.profitfromtrade.info.

In the interest of full disclosure I would like to note that at the time of publication, the publisher of this book is not a paid advertiser, but the idea has been discussed.  That possibility has not effected this review however it seems like something I should be up front about.

Why you might not want to recruit someone into an exchange

~ bpwebbrian

I haven’t caused any trouble recently so now seems like a good time to jump into the fray again!  As you should all know I’m a big fan of barter exchanges and I actively recruit trading partners into my exchanges on a regular basis.  That being said there are times when it is not to your advantage to do so.

The most common reason to trade directly with someone is simply that they are not a good candidate for an exchange.  They may be skittish about barter in general and the baggage (explaining it, the commissions, etc.) that comes with exchanges just isn’t worth it.  In those cases I just keep it simple and trade directly.  If they want something that is available through my exchange I just buy it for them through the exchange.

A more controversial reason to keep a trader to yourself is that the deal is too good to share with your exchange.   I’ve never run into a  trade partner who didn’t have some kind of limit as to how much barter they wanted to do.  If you work out an ongoing trade with a vendor for something really juicy I have found it advantageous to trade with that vendor to their full capacity directly.  For example I trade with both a grocery store and a butcher shop.  These relationships are pure gold in the barter industry.   I will personally use the full capacity that both of these vendors want to trade so there is no way I want to open them up to trading with others.  Even if I didn’t want to use my credit with them myself , I could probably spend gift certificates for these vendors pretty much just like cash.

Additionally I should mention that if you have a vendor that you think would be in high demand and you are on the fence about recruiting them into your exchange, proceed with caution.  I personally had a issue where I recruited a vendor that I was pretty hot on into one of my exchanges.  Once they were in, the exchange informed me that they were rationing services from the vendor.  I was told that I could not necessarily buy as much as I wanted from this vendor even if it was under the vendor’s total barter capacity.   Never mind the fact that the only reason anybody in the exchange had a shot at trading with them is because I recruited them in.  I ended up sorting it all out but the experience definitely put a damper on my enthusiasm for recruiting for the exchange for a while.

Improve your financial statements with barter

~ bpwebbrian

As all of you fellow barter fanatics know, being taxed on barter transactions is unavoidable if you want to stay on the right side of the prison door.  So with that in mind I think it’s worth while to mention that there is definitely a positive side to reporting all your trades:  Including your trades in all your books makes your financial statements look better!  In these times with great deals on loans, but so few people who qualify, keep in mind that every trade you make shows up on your P&L statement and makes you look that much more attractive to lenders.  If you belong to a barter exchange you will definitely need to include your exchange account on your balance sheet as well.  In the same way that inflated barter prices can hurt you on tax day, it can help you on the day you close your new lower home or business loan.  Additionally if you are looking forward to a loan you need in the future, or you want to start working on selling your business, it’s never too late to start bartering to improve your financials.

Using barter to save on insurance

~ bpwebbrian

Unfortunately I have yet to find a way to barter for insurance.  It’s not because it’s illegal to barter for insurance (don’t get me started).  I think it’s simply because insurance is sold by brokers that are paid on commission.  There isn’t enough of a margin for a broker to sell insurance on barter.

Anyway…regardless of that I have found a way to use barter to save on insurance.  What I do is quite simple:  I buy less insurance.  Now that I have auto mechanics and auto-body shops that I can barter with, I am not worried if I reduced the amount of auto insurance that I carry for repairs on my own car.  I know that if I get in an accident I can get my car fixed without having to pay for everything in cash out of my pocket.  This is true for my home appliances too.  A while back I bought my wife a nice front loading clothes washer and I was told that it’s smart to buy the extended warranty with those.  Well I did that for a while but then I realized…I can always barter to have the appliance repaired if it breaks.  I dropped the insurance, keeping my cash and if it breaks the barter appliance repair guy is just a call away.

Clearly there are risks in going this route.  If my car is totaled in an accident my barter repair shop doesn’t really help.  And of course you still need liability insurance on your car to cover everyone else on the road.  What this strategy does allow me to do though is reduce the amount of insurance that I’m paying for and still be able to sleep at night knowing that I still have a way to repair my cars if needed.

How to calculate tax/tip when bartering

~ bpwebbrian

UPDATE:  I have a new easier way to calculate tax/tip posted here.

We’ve already discussed in the past how valuable it is to have restaurant barter partners.  As such it is important to act as a good “barter ambassador” and make sure you tip well.  The last thing you want is for a restaurant to quit bartering because their waitstaff complain that barter folks are bad tippers.  That being said I have to be honest and say that even when I want to tip well often it is tough to be sure my math is correct when I’m calculating the tip.  I know it’s not rocket science but there are a couple things that make barter tipping more complicated than a “normal” tip.  First off, most restaurants want both tax and tip in cash.  To complicate things more, many times you are paying with script that doesn’t add up evenly to the barter portion of the bill.  So with all this in mind, here is the method that I’m currently using to calculate how much barter and cash I should leave on the table:

  1. Calculate what the total for the meal, tax and tip would be in cash and remember that number.  For those of you that are memory-challenged like myself  feel free to write that down.
  2. Pay the meal portion of the bill in barter.  Often barter script comes in 10 dollar denominations.  To make the calculation easier it’s my recommendation to never round up with your use of barter script.  Round down.  Step three addresses covering the difference in cash.
  3. Subtract the difference between the number you came up with in step 1 and the amount of script you left in step 2 and that’s what you leave in cash.

Here’s an example:  Your meal was $55 and tax was $5.

  1. $60 x 120% = $72 (for a 20% tip….I normally tip on the tax too…is that what everybody else does?)
  2. $50 in script (round the $55 down to $50)
  3. $72 – 50 = $22 in cash

That’s not so hard is it?  This method is simple enough that you can do it accurately and quickly every time.  The common place to get tripped up is if you round up with your barter.  There is nothing wrong with doing that, but then you have to remember to add in the extra barter in step 3 that shouldn’t count toward your tax and tip.

Here’s an example if you round up:  Your meal was $55 and tax was $5

  1. $60 x 120% = $72 (that’s the same as above)
  2. $60 in script (round $55 up to $60 so you’re leaving an extra $5 in barter)
  3. $72 – 60 +5= $17 in cash  (You are adding back in to make up for the 5 extra barter dollars you gave in step 2 that don’t count toward cash and tip)

In this example rounding the barter up is actually a better deal for you.  You are paying $5 in barter to save $5 in cash.  It’s pretty easy to mess up the math though.  If you don’t remember to add back in the extra $5 you only end up leaving $12 in cash, $5 of which was tax.  That leaves only $7 for your tip on a $60 bill.

YUMMMMMMM!!!!

~ bpwebbrian

I can’t help it!  I just have to brag!  My wife and I had the most wonderful meal at home tonight 100% on barter.  Yesterday morning I went by a local butcher shop that I barter with and picked up two of the biggest dungeness crabs I have ever seen.  I drove from there to a local bakery that I barter with and got a big loaf of fresh sourdough bread.  What a feast!  I was so excited about getting the crabs that I forgot to ask the shop to clean and crack them so I had to do it myself.  <grin>  To be fair though, it wasn’t quite 100% barter….I paid cash for the lemon and butter.  I’d be happy to hear you brag about your barter meals with the “join the discussion” link below.

Barter for my kid's College Education?

~ bpwebbrian

I’ve got three kids in grade school and no college savings to speak of.  That being said of course I want to give my kids all the advantages in life that I can.  High on that list would be a college education that does not burden them with tens (or hundreds) of thousands of dollars of debt on graduation day.  So my question to all of you wonderful barter fanatics with a whole lot more barter experience than myself:  How would you pursue bartering for college?

The good news is that my “real” business is online marketing.  Building, maintaining and promoting websites is something that every university needs.  My guess is that bartering with government agencies would be difficult/impossible so I shouldn’t bother with state schools.  I’m thinking that I should make a list of private institutions, ideally in my state that are “drivable” and start right now making calls and looking to make  a deal that will allow me to earn credit with them that will accrue over the years.  Then come high school graduation I can tell my kids they can go to any school they want as long as it’s the one I have my deal with.  The flaw with my plan is that it’s my understanding that most private schools have plenty of money.  It’s been my experience that folks with plenty of money don’t usually want to bother with the extra work it takes to barter.  Another problem is that a college education is more expensive than many websites are.  Even if I had a deal conducting $10k worth of work every year from now until when my twins leave for college, that’s only 8 years from now.  $80k doesn’t pay for whole college education for even one student does it?  I’m thinking that I’ll need to find at least one school for each of my kids that would want to do a lot of trading. 

Ideas?  Have any of you ever done this?  Please send your inspirations my way and I’ll be happy to share them.  Better yet….does anyone have contacts at colleges that would be in a position to discuss barter?

Beyond your broker

~ bpwebbrian

Of course one of the many luxuries of membership in a barter exchange is your broker.  Your broker is there to help you.  One of the main things they do is help you find the deals that you are looking for.  That being said I would like to caution you to not be overly dependant on your broker.

Don’t get me wrong.  I love my brokers and (I hope) they love me.  What I’m saying is that they are only human.  They usually have many members assigned to them and it’s very difficult for them to keep track of everyone.  Here are a couple tips to make sure that you get the most out of your exchange while helping to take a load off your broker:

  1. There is nothing wrong with calling up your broker and seeing if they have a specific service available.  Before you do that though I would recommend that you look at your exchange’s online directory.  It’s very likely that that’s exactly what your broker was going to do anyway.
  2. Call other members directly.  I’ve found on numerous occasions that a member has told the exchange that they are limiting their trade volume, but if you call them direct they are happy to make a deal beyond the limit they told the exchange.  Even if your broker says that a particular member isn’t doing much trade, give them a call.  I’ve found as a business owner that it’s very difficult to turn away a new potential client and there is a good chance the member you call will feel the same way.
  3. Of course just because your broker says that they don’t have a particular service available doesn’t mean that you can’t still barter for that service.  Don’t just accept that “no.”  It doesn’t take much time to call or email 5 local vendors of that particular product/service and offer to make a trade.  Most won’t accept, but some will.  Some will be interested enough that they will join your exchange giving you a nice little commission.
Bottom line:  Don’t just be a consumer of barter services from an exchange and don’t be completely dependent on your broker.  Barter is a relationship adventure.  Dive in.  The water’s fine.